Avon 2003 Annual Report Download - page 74

The liability balances and employee terminations by business segment were as follows:
2001 Charges:
North Latin Corporate
America* U.S. America Europe Pacific and Other Total
Total Accrued charges $ 17.7 $ 26.1 $ 24.1 $ 15.3 $ — $ 14.2 $ 97.4
Less: Foreign exchange — — (3.4) 1.2 — — (2.2)
Less: Expenses charged (15.1) (19.8) (13.1) (15.8) — (12.7) (76.5)
Less: Adjustment 2003 (.2) (1.1) (.2) — — (.6) (2.1)
Less: Adjustment 2002 (2.0) (4.4) — — — (.9) (7.3)
Balance at December 31, 2003 $ .4(a) $ .8(a) $ 7.4(b) $ .7(a) $ — $ — $ 9.3
Number of planned employee terminations 362 460 2,007 533 — 125 3,487
Remaining employee terminations at December 31, 2003 — — 583 — — — 583
*Excludes amounts related to the U.S.
(a) The majority of the remaining liability relates to remaining amounts payable to employees already receiving severance.
(b) The majority of the remaining liability relates to employee severance costs relating to a facility rationalization in Mexico. The facility project includes the closure of a manufacturing
and distribution facility, a construction plan to expand an existing facility and the moving of the manufacturing and distribution functions on a staged basis to a newly constructed
site. The workforce will be terminated over a transition period through 2004 (700 in 2002, 600 in 2003 and 500 in 2004). The distribution facility was closed in October 2002.
Construction of the manufacturing facility was substantially completed in the second quarter of 2003. Transition of the production to the new facility began in the third quarter of
2003 and is expected to be completed by December 2004.
2002 Charges:
North Latin Corporate
America* U.S. America Europe Pacific and Other Total
Total Accrued charges $ 4.7 $ 6.2 $ 4.1 $ 17.5 $ 7.2 $ 3.9 $ 43.6
Less: Foreign exchange .7 — .2 3.4 .2 — 4.5
Less: Expenses charged (5.0) (3.9) (2.6) (11.8) (6.5) (3.3) (33.1)
Less: Adjustment 2003 .3 (1.0) (.8) .4 (.7) — (1.8)
Balance at December 31, 2003 $ .7(a) $ 1.3(b) $.9
(c) $ 9.5(d) $ .2(a) $.6 (a) $ 13.2
Number of planned employee terminations 152 179 241 302 119 41 1,034
Remaining employee terminations at December 31, 2003 — 28 58 15 — 4 105
* Excludes amounts related to the U.S.
(a) The majority of the remaining liability relates to remaining amounts payable to employees already receiving severance.
(b) The majority of the remaining liability relates to employee severance costs associated with workforce reduction programs within the sales and supply chain functions. Employee
terminations began in December 2002, with a majority of payments made by December 2003.
(c) The majority of the remaining liability relates to workforce reduction programs in Venezuela which is expected to be substantially completed by the third quarter of 2004.
(d) The majority of the remaining liability relates to employee severance costs associated with sales force reductions in certain Western European markets and the closure of a distribu-
tion facility in Italy, which was completed in the third quarter of 2003. Employee terminations for the various initiatives began in November 2002, with the majority of terminations
made by December 2003.
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